Lord Clinton-Davis: I apologise if I expressed myself inelegantly or in an inappropriate manner. I was referring to the intervention made when the noble and learned Lord cited the speech made by my noble and learned friend. That does not altogether sit easily with the remarks that he has made during the course of these debates.

I understand that my noble and learned friend will adopt a measure of flexibility. However, while he is reluctant to be more specific about the kind of instances where that would apply--I understand that--the matter remains imprecise. That makes things difficult for people who practise in these areas. I do not know whether any Member of the Committee wishes to speak again before I seek to withdraw the amendment, as I propose to do. I see no vigorous nodding of heads. I ask my noble and learned friend to respond to the points I have just made.

4.15 p.m.

The Lord Chancellor: I do not propose to respond as I did so in the previous arguments that I put to the Committee.

Lord Clinton-Davis: Perhaps my noble and learned friend will at least indicate what he meant by a majority of personal injury cases, and the extent of that majority.

The Lord Chancellor: I shall read Hansard to see precisely what I said but I have total confidence that the overwhelming majority of personal injury cases will be funded successfully through conditional fee agreements. For many years trade union solicitors have carried forward bulk personal injury litigation successfully for those whom they represent on terms specifically of not expecting fees from their substantive clients--the trade unions--when they lose because the fees they get when they win enable them to run a profitable business. In

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fact probably the best evidence that conditional fee agreements are completely viable in this area is precisely what I have now said.

Lord Phillips of Sudbury: I rise to--

The Lord Chancellor: The noble Lord, Lord Phillips of Sudbury, wishes me to give way before I have completed my reply to my noble friend Lord Clinton-Davis. However, I yield to his enthusiasm.

Lord Phillips of Sudbury: I am grateful to the noble and learned Lord the Lord Chancellor for so doing. He has twice now mentioned firms which represent trade unions and the manner in which they conduct business. My own firm represents one of the large unions and has for a long time had an arrangement with that union as to the payment of costs. However, I must assure the Committee that that situation is not comparable with the situation we are talking about which concerns a case by case arrangement for individual solicitors dealing with clients as they come through the door. A relationship with a trade union involves swings and roundabouts. The arrangement is capable of being adjusted from month to month and year to year to ensure that the firm concerned gets a fair return overall for the cases. There is no such averaging out in the case of an individual solicitor who is dealing with an individual client.

The Lord Chancellor: The noble Lord, by that intervention, gives away his position. What we are doing is addressing whether individuals will have access to justice through conditional fee agreements. I say they will because we can see that the volume providers of services, the trade union lawyers, make a satisfactory profit in providing that volume service. However, the noble Lord says that one cannot equate that with the position of the small lawyer. That shows that the noble Lord is seeking to defend the interests of a particular group of lawyers. The question I am addressing is whether the public will have access to conditional fee agreements in the overwhelming majority of cases. I say that they will.

There is a further point I desire to make in reply to my noble friend Lord Clinton-Davis. The only cases where I have a measure of concern is where there are high investigative costs. We are taking powers under the Bill partially to fund cases going forward under conditional fee agreements so that sums are advanced to cover these high investigative costs. These are the reasons why I have confidence in the situation and why I repeat my invitation to my noble friend to withdraw the amendment.

Lord Clinton-Davis: My noble and learned friend is right to underline again the particular category of case where it is virtually impossible to proceed because of high investigative costs. That point was mentioned by the noble Lord, Lord Kingsland. My noble and learned friend has given an assurance to the Committee that he is giving serious consideration to this kind of issue. I must say that I am no more enlightened about his view

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of the majority, to which he had referred earlier--and to which he has referred twice more in his remarks--than I was before. I am tempted to submit a request for further and better particulars as regards a majority. However, I shall not hold up the deliberations of the Committee to extract a reply at this stage. I cannot promise that I shall not return to this matter at further stages of our consideration of this Bill. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 92 and 93 not moved.]

Lord Kingsland moved Amendment No. 94:

Page 5, line 14, at end insert--
("( ) Where services are funded in accordance with subsection (3)(b), payment shall be made in accordance with regulations made by the Lord Chancellor after consultation with the Law Society and the General Council of the Bar, and in making such regulations the Lord Chancellor shall have regard to the principle of providing fair and reasonable remuneration.").

The noble Lord said: Amendment No. 94 concerns the regulations which will be made by the noble and learned Lord the Lord Chancellor to determine the conditions under which payments are made by subsection (3)(b) of Clause 7. There are two issues to which I wish to draw the noble and learned Lord's attention. First, it is desirable that the noble and learned Lord should consult both the Bar Council and the Law Society before making those regulations. Secondly, the basis upon which payment should be made under Clause 7(3)(b) should be as transparent as possible. This is to prevent the undermining of quality services. In making these proposals, I am reflecting the terms of the Legal Aid Act 1974 with respect to transparency and the Legal Aid Act 1988 with respect to consultation. I beg to move.

The Lord Chancellor: The purpose of these amendments is to provide a framework in which remuneration of lawyers will be determined. Amendments Nos. 94 and 182 would restore the concept of fair and reasonable remuneration to the face of the legislation. Amendment No. 184 would require me, in relation to services procured through the criminal defence service, to respect the principle that such services are to be remunerated by payment of a reasonable amount in all the circumstances of the case.

I do not accept the terms of the present amendment. The terms "fair" and "reasonable" are far too wide and imprecise. Nor do these amendments contain any reference to what might be affordable or what value for money might be achieved through the remuneration scheme. At the risk of becoming tedious, I have to say that public money is limited; the priorities for that public money are many, and they compete with each other. It cannot be right that a duty should be placed on the Lord Chancellor to make regulations relating to the remuneration of lawyers which take no account of the availability of those public funds. To suggest otherwise is not to live in the real world.

I am not attracted simply to carrying into this Bill provisions about remuneration that have previously failed. It seems to me that the Lord Chancellor should

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have a discretion to set rates, as now, but that in doing so he should have regard to the extent to which the rates ensure the availability of a sufficient number of competent practitioners, the cost to public funds and the value for money achieved for the taxpayer, and the beneficiaries of the help received from the money spent.

I propose to put down an amendment along those lines, setting out the factors that the Lord Chancellor should consider in fixing remuneration rates. I will also address the level of any consultation that might be appropriate in the circumstances. On that basis I invite the noble Lords who tabled these amendments not to press them.

Lord Kingsland: When the noble and learned Lord the Lord Chancellor began to speak I felt a sensation of intense and acute depression, but I had somewhat recovered by the end of his speech. I thank him for what I take to be a move in some direction towards the terms of these amendments. I look forward to seeing what he has to say about the matter and debating it again at Report stage. I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

Clause 7 agreed to.

[Amendment No. 95 not moved.]

Schedule 2 [Community Legal Service: excluded services]:

Lord Goodhart moved Amendment No. 96:

Page 53, leave out lines 33 and 34.

The noble Lord said: Paragraph 2 of Schedule 2 excludes from any possibility of funding out of the CLS,

"Services consisting of the provision of help in bringing or defending any proceedings in the course of carrying on a business".

The Legal Aid Act 1988 and its predecessors excluded any form of legal aid to corporate bodies. I think that is an entirely correct position, which is continued by the present Bill. Under the Legal Aid Act, aid can be granted to business proceedings if the business is carried on by an individual on his own or by individuals in partnership. This paragraph of Schedule 2 would exclude that possibility. I believe that position is wrong.

In a small business carried on by an individual, a business action may well destroy that person's livelihood. Let us consider the example of a corner shop. The lease of that shop comes to an end and there is an application for a new tenancy under the Landlord and Tenant Act. The landlord puts in a wholly unjustifiable claim for a much higher rent before the new tenancy is granted. If that claim takes effect, the shop may be forced out of business and the shopkeeper may well suffer personal bankruptcy. A challenge to that claim in the court is very likely to require help from a lawyer and, indeed, from a surveyor. Very many small shopkeepers would not be able to afford that help. Should it not be possible for such shopkeepers to be at least considered, in due course of priority, for help from the community legal service fund?

In a case of that kind it is very hard to see how a CFA could possibly be suitable. It is not a risk of the kind covered by a normal insurance policy. I accept that if the owner of the business has chosen to get the benefit of limited liability by incorporating the business, he should not get publicly funded

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help for the benefit of that company. Nor would I expect the community legal service to fund the costs of large firms, solicitors and accountants.

Cases where it is appropriate to fund business proceedings out of the community legal service fund will certainly be rare, but I believe that small businesses should not be excluded altogether from the possibility of applying. I accept that if a CFA is available, the case should not be funded by the taxpayer. But that is not always the case and it is not appropriate to exclude that type of case on the assumption that a CFA will always provide an acceptable alternative to public funding. On the relatively rare occasion where a business is conducted by an individual and a case represents a real threat to his livelihood there should be a possibility of funding out of the community legal service. I beg to move.

4.30 p.m.

The Lord Chancellor: I do not accept this amendment. One of the key objectives of these reforms is to ensure that publicly funded help under a controlled budget is directed to areas where the need of people is greatest, such as social welfare cases and public interest cases; for example, those involving the interests of children. Politics is the language of priorities and there are hugely competitive demands on the public purse. I have to live within a controlled budget. Proceedings carried on in the course of a business do not, in my judgment, have sufficient priority to warrant any public funding other than for the provision of basic information and advice on the law.

I agree with the noble Lord that under the current legal aid scheme legal aid is not available to companies but a sole trader can currently receive legal aid to pursue a business dispute. Businessmen who are running profitable businesses have the option of insuring against the possibility of having to take or defend legal proceedings. I do not follow how the noble Lord is able to assert that insurance is necessarily not available for the kind of case which he supposed. It is a question of judgment and priorities. I do not believe that the taxpayer should have to meet the legal costs of sole traders who do not take out adequate insurance.